The Amendment Directions, which will come into effect from April 1, 2027, or on such earlier date as a bank may decide to implement the SOP, propose to amend existing instructions on Operations of Bank Accounts and Money Mules as prescribed in its KYC Directions, 2025.
This follows the Supreme Court’s August 4, 2026 order directing the Reserve Bank to adopt and circulate a Standard Operating Procedure (SOP) prescribing the action to be taken by banks for placing temporary debit holds on amounts or accounts linked to money-mule activity and cyber-enabled fraud.
SOP to cover banks and urban cooperative banks
The SOP shall apply to all Commercial Banks and all Urban Cooperative Banks. It shall not apply to nodal accounts, pool accounts, escrow accounts, or other special-purpose accounts, e.g., dividend and share capital accounts.The maximum duration of a temporary debit hold, in the absence of any contrary instruction from an LEA (law enforcement agency) or Competent Authority, will be 60 days from the date of the temporary debit hold.
As soon as a bank identifies a Suspected Money Mule Transaction or Account, through its transaction-monitoring system or under its internal policy formulated, it shall immediately place a Temporary Debit Hold on the Suspected Money Mule Transaction or, if the account is a Suspected Money Mule Account, on the entire account.
Account holders to be notified of debit holds
Upon placing the temporary debit hold, the bank shall immediately notify the account holder through digital mode; otherwise, by End of Day of the next day.Further, the bank shall notify the account holder of the Temporary Debit Hold, stating the reasons, the process for removal, and the concerned officer’s contact details, through digital mode (if mobile number/e-mail is on record) or physical mode.
The bank shall seek the account holder’sexplanation/justification on the genuineness of the transaction/account. For this, it will give 20 days from the date of Temporary Debit Hold to the account holder to submit the explanation/justification.
The bank shall examine the explanation (where received) and/or conduct due diligence (where no explanation is received). It must take a decision within 10 days of receipt of the explanation/justification. If no explanation is received, the bank shall take a decision within 30 days from the date of the temporary debit hold.
Action on law enforcement directions
The bank must act immediately and notify the account holder when it receives an instruction/direction (backed by appropriate statutory provisions) from an LEA or a Competent Authority within 30 days from the date of reference.Further, the bank shall remove the temporary debit hold and notify the account holder where no instruction/direction (backed by appropriate statutory provisions) specifically requiring continuation of the temporary debit hold is received from the LEA or a Competent Authority within 30 days from the date of reference.
Banks to implement technology solutions
Banks must implement tech solutions to identify suspected money mule and cyber-enabled financial fraud-related transactions; a process to link to the National Cybercrime Reporting Portal’s Citizen Financial Cyber Fraud Reporting and Management System; and a customer grievance redressal mechanism, among others.Published on September 11, 2026
